Fifty years after the release of the Asprey Taxation Review, one of its most significant contributions to Australian tax policy has once again raised its head: should tax be assessed on individuals, or on families?
Conservative politicians are again arguing that a joint tax system of “income-splitting” that allows families to split income between spouses would be more equitable. In fact, this approach has been comprehensively debunked. Evidence from economics, gender studies and the law all support the individual tax unit as being more equitable and more consistent with contemporary attitudes.
The article that I wrote to celebrate the 50th anniversary of the Asprey report, “Asprey was a feminist: A gendered analysis of the tax unit”, published in the Journal of Australian Taxation, revisits Asprey’s position through a gender lens and asks whether the individual tax unit continues to provide the most equitable and efficient basis for taxation in modern Australia.
Although the preliminary report of the Asprey Committee was open to further debate on adopting a joint tax system, the Chair, Hon. Kenneth William Asprey, included a personal reservation supporting the individual tax unit in the final report. He argued that a married woman should be treated as an individual in her own right and should pay the same tax as any other person earning the same income. At a time when second-wave feminism was challenging the economic dependence of women, Asprey’s reservation reflected a growing recognition that women are economic actors in their own right rather than dependants of their husbands.
The Asprey Review was commissioned in 1972 during a period of major social transformation. Rising female workforce participation, demands for equal pay, the removal of marriage bars, and broader movements for women’s rights were reshaping Australian society. Although the Committee was principally concerned with tax reform, it recognised that taxation cannot be separated from social outcomes, evaluating the tax system according to four key principles: fairness, simplicity, efficiency and revenue adequacy.
Labour Market Participation and the Secondary Earner: Why the Tax Unit Matters
The choice of tax unit has important consequences for both economic efficiency and gender equality.
Under an individual tax system, each person is taxed on their own income. Under a family tax system, often referred to in Australia as “income splitting”, tax liabilities are based on the income of a couple or household. Although other countries historically adopted family taxation, the international trend has been towards individualisation.
The reason is simple: taxing families tends to penalise secondary earners, who are most often women.
In a progressive tax system, joint taxation can result in the second earner’s income being taxed at the higher marginal rate generated by the primary earner’s income compared to the tax rate that they would pay on their own income. This reduces the financial reward from paid work and may discourage labour market participation.
OECD research shows that secondary earners—especially mothers with young children—are more sensitive to financial incentives than primary earners. When additional work results in relatively little extra income after taxes and benefit withdrawals, participation becomes less attractive, resulting in women withdrawing from the paid workforce.
This matters not only for economic growth and government revenue, but also for women’s economic independence and lifetime earnings.
The Other Side of the Equation: The Transfer System
Although Australia taxes individuals, most transfer payments are assessed on family income, creating a fundamental mismatch.
Payments such as Family Tax Benefit and Child Care Subsidy are means-tested using combined household income. As family income rises, benefits are withdrawn. For many families, particularly those with children, additional earnings can trigger substantial reductions in benefits. The combined effect of income tax and benefit withdrawal creates high effective marginal tax rates (EMTRs).
As a result, the transfer system effectively reintroduces elements of joint assessment, even though the tax system itself remains individualised.
The consequences are most significant during the years when parents are balancing paid employment and caring responsibilities.
Gender Equity and the Care Penalty
Tax policy cannot be viewed as gender-neutral.
While Australia has largely moved from the male breadwinner model to a dual-earner society, caring responsibilities remain unevenly distributed. Women continue to undertake a greater share of unpaid care work and experience lower lifetime earnings as a result.
These differences contribute to the gender pay gap and reduce women’s economic security throughout their lives.
The assumption underlying joint tax-transfer systems—that household resources are fully shared—does not always reflect reality. Economic dependence within relationships can limit bargaining power and leave women vulnerable if relationships break down.
From this perspective, Asprey’s insistence that women should be recognised as individual taxpayers remains highly relevant. Economic independence is not simply an issue of efficiency; it is also a matter of basic rights and equality.
Retirement and the Gender Superannuation Gap
The same tensions appear in retirement income policy. The interaction between an individualised savings system and a household-based means test creates anomalies that disproportionately affect women.
Australia’s superannuation system is individualised, with benefits accumulated in personal accounts. Yet women continue to retire with substantially lower superannuation balances than men due to lower lifetime earnings, career interruptions and caring responsibilities as the superannuation system fails to adequately recognise unpaid care work and its long-term financial consequences.
Although superannuation balances are unequal, in retirement, Age Pension eligibility is assessed using the combined income and assets of a couple. This means that one partner’s assets can reduce the pension entitlement of the other, regardless of whether the couple makes decisions jointly about using superannuation.
Could Universal Basic Income Solve the Problem?
One potential solution would be to redesign the transfer system around individuals rather than households.
Universal Basic Income (UBI) and Basic Minimum Income schemes provide payments directly to individuals without household means testing, potentially eliminating many of the work disincentives and gender inequities associated with family-based assessments.
However, while attractive in theory, a universal basic income system would be prohibitively expensive in Australia. It would require significant restructuring of both the taxation and transfer systems and could produce unintended distributional consequences.
As a result, a fully individualised transfer system appears politically and fiscally unrealistic.
Conclusion
The Asprey Review emerged during a period of profound social change, and Kenneth Asprey’s defence of the individual tax unit reflected a forward-looking understanding of women’s economic rights.
Fifty years later, the evidence suggests that he was right. Individual taxation promotes both efficiency and equity by supporting workforce participation and recognising women as independent economic actors.
Yet the challenge remains incomplete. Australia’s transfer system continues to assess need at the household level, creating high effective marginal tax rates and reinforcing gendered economic outcomes.
Proposals from conservative politicians for an income splitting system are often framed around giving parents more choice around how to care for their children. However, this is a throwback to the male breadwinner model of the mid-20th century and does not recognise the changes in society that enable women to be financially autonomous. These proposals would entrench the role of women as carers, financially dependent on their partner.
The enduring lesson from Asprey is that genuine equality requires more than formally treating individuals the same. It requires careful attention to how tax and transfer systems interact with caring responsibilities, labour market participation and economic independence. While Australia has made substantial progress, the tension between individual taxation and family-based welfare remains one of the most important unresolved issues in tax policy today.
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